Partnerships in Thailand - Juslaws & Consult Co., Ltd
PRACTICE AREAS
Company Registration

Partnerships in Thailand


While incorporating a partnership for Thai nationals is considered very simple with less restriction, partnership for Foreigners are restricted by, again, Foreign Business Act.

There are two types of Partnership in Thailand, ordinary partnership and limited partnership. In general, according to Thailand Civil and Commercial Code, a partnership is “A contract whereby two or more persons agree to unite for a common undertaking, with a view of sharing the profits which may be derived there from.”

Ordinary Partnership


An ordinary partnership means that two or more people agree to unite their capitals to carry on activities together, with the purpose of sharing the net income derived from such activities. All partners are jointly and unlimitedly liable for the obligations of such as partnership for development.

An ordinary Partnership is considered to be a kind of a contract. Therefore, it is not required by law to register the Ordinary Partnership. It could be incorporated by merely making an agreement between partners without any formal registration. Nonetheless, the ordinary partnership is able to be registered, once the ordinary partnership is registered, it is considered as a juristic person.

Characteristics of an ordinary partnership


An ordinary partnership is much more popular than other types of partnerships or companies, since such a partnership is considerably easy to establish, the organization itself is informal and no registration is required. There are only two people needed to establish a partnership.

All kinds of partnerships have similar characteristics. For example, a Registered Ordinary Partnership (often referred to as a Juristic Partnership) is just an Ordinary Partnership which was registered as a juristic person and, thus, accrued rights and responsibilities different from those of the partners themselves. It is also worth mentioning that scope of responsibility of partners of a registered partnership is not the same as for partners of a non-registered partnership.

Establishment of a Partnership


Generally, a partnership is established through an agreement made by the potential partners. All prospective partners agree to invest in the establishment of a partnership prior to the commencement of a certain activity; in some cases a partner can join an already existing partnership (it can be done by either entering as a new partner or buying shares from one of the actual partners).

Terms shall be clearly specified (orally or in writing) when establishing a partnership; nevertheless, in some cases a partnership is based on relations between partners. Actually, establishment of an ordinary partnership does not require documentary evidence or any specific legal process. On the other hand, a registered ordinary partnership or a limited partnership shall be registered. The registration is made to turn a partnership into a juristic body and, thus, become legally valid. Nevertheless, if a partnership is not registered, it is not considered null and void. It is merely not recognized as a registered ordinary partnership or a limited partnership. In accordance with the law, an unregistered partnership is always considered as an ordinary one; it means that all the partners are jointly and unlimitedly liable for the obligations until the partnership is registered.

Although it is not necessary to make the establishment agreement in writing, partnerships which are created to perform big projects and which require substantial investments (or the activities require documentary evidence), normally require a written agreement to avoid disputes in future.

Liquidation of an Ordinary Partnership


Dissolution of a partnership shall include management of its property and liabilities. As all partners invest capital and unite assets while establishing a partnership, it is quite possible that some partners advance their money during the process of carrying on activities or use part of the partnership’s capital. Thus, such partnership may be a creditor or a debtor in its relations with third parties. When dissolving a partnership, debts shall be settled and assets distributed; profits or losses shall be distributed as well.

Liquidation means that all the assets of the partnership are brought together in order to pay-off debts and repay shares’ value to the partners. The rest of money (if any) is considered as income and distributed between the partners. If the assets do not cover all the existing debts or there is not enough money to repay the shares’ value, the partners shall take responsibility for losses accordingly. In case the partnership in question is not registered as a juristic body, carries on a small business and there are only a few partners, there are normally just a few assets, if any; generally, there are no debts to third parties as well. Thus, there is no need to perform liquidation. Apart from this, dissolution of a partnership includes termination of a certain agreement. Partners may agree as they find convenient concerning the matter of partnership’s assets and debts.

Registration of an Ordinary Partnership


Though the registration of an ordinary partnership is not strictly prescribed by the law, an ordinary partnership can still be registered. The registration process is the same as the one prescribed for limited partnerships and limited companies. The provisions of Sections 1014 – 1024 of the Civil and Commercial Code are applicable for registered partnerships. In accordance with Section 1014, the Minister of Commerce, who is presently responsible for the registration of partnerships and companies. issues rules governing establishment of these organizations. In Bangkok, registration can be done at the Office of Central Company and Partnership Registration, while in all other provinces there are local registration offices.

In accordance with the provisions of the Civil and Commercial Code, the registration process prescribed for partnerships and companies as is follows:

1.
An application for registration shall be submitted to the District Registration Office (in accordance with the location of the partnership’s main office)
2.
The applicant shall pay the relevant government fees.
3.
The application shall include all necessary data and documents and shall conform to the applicable laws.

Limited Partnership in Thailand


A limited partnership is a kind of partnership in which there are:

One or more partners whose liability is limited to such amount as they may respectively undertake to contribute to the partnership.
One or more partners who are jointly and unlimitedly liable for all the obligations of the partnership.

The limited partnership is required to register and is considered as a legal entity. Only the second type, unlimited partner, is able to act as a managing partner. Therefore, if partner whose liability is limited interferes with the business, they will become an unlimited partner where their liability is unlimited.

Under Foreigner Business Act, foreigner who wishes to operate a partnership is restricted. If they invest more than half of overall investment or being a managing partner, the Foreign Business License shall be applied. Therefore, to avoid the Foreign Business License, foreigners should not invest more than half and should not act as a managing partner. Nonetheless, if they are not acting as a managing partner, it is less likely that they can protect their interest.

Registering Modifications to a Limited Partnership


In an established partnership, there may come a time when the partners wish to modify the partnership’s name, its seal, or its office location, make a change in partners, increase or decrease capital, or make other important modifications in the Thai company registration.

Preparing to Register


First of all, consent or agreement among the partners to modify the registration is required. If this involves a desire to change the name of the partnership, for example, the new name must be reserved.

In addition to a change in the company’s name, other reasons for modifying a registration include changing the objectives of the company, and the location of its head or branch offices. If there is to be a change in partners, then the names, addresses, ages, and investment amounts and types will also need to be specified.

Registration Procedure


The following steps are involved:

1.
Preparing the request for registration and the supporting documentation. When partners have consented or agreed on the modification(s), the managing partner is responsible for preparing the request to modify the partnership registration.
2.
There are two methods for submitting the request to modify the registration of a limited partnership:
The registration request and documentation can be submitted directly to the registrar, which can be done by the managing partner or by an authorized representative; or
The request can be submitted online at www.dbd.go.th. The registrar can then verify all the documents, including the registration request, print out the form and documents, and request that the partners sign the documents and affix the company seal. The documents are then submitted at the Partnership and Company Registration Office, or can be sent by post. This method tends to proceed faster than the first option as the registrar has already verified that the documents are correct.

Contact the experienced professionals at Juslaws & Consult for advice in modifying the registration of your limited partnership and let us guide you through all the complexities of the process.

Contact the experienced professionals at Juslaws & Consult for advice in modifying the registration of your limited partnership and let us guide you through all the complexities of the process.

SEND INQUIRY

Your Name

Your Phone Number

Your Email

Your Message

Security Code